Storm rages over UK welfare cuts

Chancellor claims 'vested interests' are 'defending the indefensible' in opposing the reforms.

The poor in Britain stand to lose out in the latest welfare cuts defended by Britain's Chancellor, George Osborne. Photo / AP

Britain's Chancellor of the Exchequer, George Osborne, will launch a scathing attack on churches and charities that oppose the Government's welfare cuts - hours after his Cabinet colleague Iain Duncan Smith claimed that he could live on £53 ($96) a week in benefits.

The Work and Pensions Secretary's attempt to justify the benefits changes he is introducing appeared to backfire when he was challenged on whether he could live on £53 a week. "If I had to, I would," Duncan Smith replied testily, before saying the changes were necessary to ensure that "taxpayers' money was not being misspent".

More than 53,000 people soon signed a petition on the influential website Change.org calling on Smith to live on £53 a week for a year - equivalent to £7.57 a day, and a 97 per cent reduction on his current income of £1581.02 a week after tax.

In a concerted government fightback against its critics, Osborne will use his speech today to claim that churches and charities which have condemned the Government's benefit reforms are simply "vested interests" reacting with "depressingly predictable outrage" to necessary change.

He will claim they are "defending the indefensible" and warn that protecting "every item" of welfare spending isn't credible in the current economic environment.

Osborne is the latest and highest-profile minister to defend the welfare changes. It comes after Conservative Party chairman Grant Shapps faced scorn when he used the fact that his own two sons share a room in justifying the "common sense" crackdown on spare rooms. It later emerged that his house is large enough for each of his three children to have their own room if one were not used as a study.

Treasury Secretary Danny Alexander, a Liberal Democrat, has also attracted criticism for referring to "bedroom blockers" in a column for the Sun on Sunday.

Duncan Smith's 16th-century Tudor house in the Buckinghamshire village of Swanbourne is said to be worth £2 million - but technically he is just a tenant. The Grade-II listed property, which includes a swimming pool, tennis courts and 1.2ha of grounds, belongs to the family of his wife, Betsy. Her father, John Tapling Fremantle, the fifth Baron Cottesloe, moved out of the house with his wife several years ago, and Smith and his wife and four children moved in.

Osborne, in his speech, is expected to warn that the economic situation means that the welfare bill is unsustainable.

In an attack on Labour he will claim that politicians cannot just "wish away" Britain's debt problem and take the "cowardly" way out.

And he will claim that new Treasury figures show that, as a result of the changes in last month's Budget, nine out of 10 working families are better off than they were last year.

"Those who defend the current benefit system are going to complain loudly," he will say. "These vested interests always complain, with depressingly predictable outrage, about every change to a system which is failing. [But] defending every line item of welfare spending isn't credible in the current economic environment."

Osborne's claim that nine out of 10 people will be better off as a result of the Budget is based, in part, on his announcement that the level at which people start paying income tax will rise to £10,000 next year.

But an analysis by a senior academic for the Resolution Foundation think-tank concludes that most of the gains for low to middle-income families will be wiped out by the Government's new universal credit programme which is being rolled out across the country from this month.

Universal credit combines all benefits and tax credits into a single payment automatically linked to earnings. But because payments are calculated on income after tax, any tax cut that boosts income will reduce universal credit support.

Thus while a tax allowance hike of £1000 would be expected to lead to a gain of £200 in post-tax income, £130 would be reduced from universal credit payments, leading to a net gain of just £70.

Labour renewed its attack on the benefit changes.

The shadow Chancellor Ed Balls said that, according to the Institute of Fiscal Studies, the poorest 10 per cent of households will lose an average of £127 under this year's changes, while the richest 10 per cent will gain almost 10 times that, or £1265. And families with children would be hit harder, Balls said, with the poorest 10 per cent losing £236 a year.

"It's appalling, it's shocking, it's immoral," he told the Daily Mirror, adding: "What planet are they on? I can't believe they are so callous."

Where it goes

FoodThe most significant outgoing is on food. According to a recent Mintel survey, the average weekly spending on food by a family is £85 ($154).

But for benefits claimant Denise Ellerman, 51, from Stoke-on-Trent, the food bill still accounts for the majority of her weekly budget. She said the "bedroom tax" will see her income after rent and council tax fall to £57 - only £4 more than Iain Duncan Smith's notional £53-per-week.

She can afford to spend £35 per week on food for her and her daughter, a student who lives at home. On that sort of budget, many have to plan carefully what they buy.

Another claimant, Neil James, who budgets to spend £71 a week in total, said he is careful to buy plenty of cheap carbohydrates with each shop.

Wendy O'Brien, who lives on £65 a week, agreed that she can afford only the most basic of foods.

"I haven't bought fresh meat, chicken or fish for many months. I have a supermarket very close to my home so I pop round every evening at around 6pm, when they've made all the date-expired reductions. We have a local church that provides food parcels but I just can't bring myself to do it."

UtilitiesNearly 20 per cent of British households are in fuel poverty, with Britain bottom of Europe's league table, according to a report by the Association for the Conservation of Energy and the Energy Bill Revolution campaign.

The combined cost of electricity, gas and water to Ellerman is £14 a week. That, she said, means she can afford to heat her house for around two hours each day. The cold snap means that heating bills are hitting many households harder than they did at this stage in previous years.

James, who earned £32,000 a year before losing his job as a lecturer when he fell ill, talked of his fear at having to "permanently turn off the heating" in order to make ends meet. O'Brien spends around £7 per week on water.

The 'out of bounds' extrasWhat some benefits claimants said they could not afford:*Repairs to or replacements of household appliances, eg a broken washing machine*Mobile telephone*Internet access*A car and, in some cases, public transport*Alcohol*Cigarettes*Socialising away from the home.Independent